How to remove local sponsor from your business -Simple guide unlocked

So, you have decided to change your local sponsor and now you want to know how to remove local sponsor. Well, you are in luck because Prospr is here to guide you how exactly you can handle this tricky matter. A local sponsor usually owns 51 percent share of your Mainland company and removing it from the company is going to be a complicated process. 

But guess what, no matter how complex the process is, Prospr is going to simplify the process for your ease.

It’s time to understand:

Steps to remove local sponsor

Here are some steps you need to take.

Step 1: Terminate employment contract

The very first thing you need to do if you want to remove local sponsor from your llc is termination of your employment contract. In an ideal scenario, you and your local sponsor can terminate the contract with mutual agreement. But if your sponsor doesn’t agree to your decision then you can file a lawsuit and give a notice period.

 Now you will be wondering: how long this notice period will be. Well, length of your notice period completely depends on your contract and laws in your jurisdiction.

Step 2: Document prep to remove local sponsor

Once you terminate the contract or send a notice period, the next thing to do is to prepare all the documents for changing your local sponsor. You will make changes in your Memorandum of Association, trade license, and Articles of Association. 

Once you make the changes in these company documents, you need to get the signs of previous and new partners/owners of the company to sign these amended documents. You also have to set up a board meeting to seek board resolution on this matter.

It’s possible that you need to furnish some additional documents based on your specific case. For example, passport copies, trade licenses, etc. 

Check comprehensive guide about finding a local sponsor in UAE

Step 3: Get a No-objection Certificate

Since you have terminated your employment contract, and made changes in the document, it’s the right time to seek NOC. This NOC will clear that your existing sponsor has no issue with the departure and all the obligations are met. In case your sponsor doesn’t agree to departure, you can file a lawsuit or handle this matter outside court. Latter option is suitable for everyone, though. You need an NOC for getting a new visa from a new sponsor.

Step 4: Residence visa transfer

As you remove your local sponsor, the next thing is to transfer your residence visa to new sponsor. The whole process will take weeks, so if you have a plan to change or remove local sponsor, it’s better to make this plan ahead of time.

Step 5: Obtain exit clearance

Once your visa is transferred to a new sponsor, you need to acquire exit clearance from the Dubai immigration authorities. This clearance permits you to leave the country as and when you need. When it comes to applying for clearance, you can either visit the local office or apply online- it’s completely up to you.

The whole process of removing a local sponsor from your company is a time consuming and complex process, especially when you have little know-how of local laws. If you feel confused or stuck at any time, remember that Prospr is here to help. Our business consultants are there to make your life and business easier in Dubai. 

We understand how challenging it is for you to navigate the complexities of this country as a foreigner. Thereby, we are always ready to assist and guide you in every possible manner. Feel free to email us : hello@prosprplus.ae with any question or query you have in mind.

Reasons to remove a local sponsor

Different companies have different reasons to remove local sponsor, but here are some common reasons:

• Cost: The very first reason most companies plan to change or remove local sponsors is the cost associated with this partnership. Many times sponsors charge high fees and provide little value in return. If that’s the case with your company, you can consider finding a cost-effective sponsor.
• Inadequate Support: The reason for adding a local sponsor in a Mainland company is to get the support from a UAE citizen and company.  This person is basically a PRO that works on company behalf and supports it wherever required.  Many times, a company feels that they are not getting adequate support and PRO service from a local sponsor. Thereby, they plan to remove them.
• Relocation: Another major reason to remove local sponsor in UAE is relocation. Your company may have decided to move to a new location and think that the existing sponsor can’t be of that help in the new location. So, you decide to find a new local sponsor in another location.
• Legal issues: Sometimes conflict and legal issues with local sponsors force a company to seek a new sponsor. Instead of starting a legal fight or escalating a matter, it’s in the best interest of everyone to seek a new sponsor and remove existing ones.
• Better terms: Many companies remove local sponsors to find a new sponsor with better terms. They want to sign a contract where they can get the maximum value and comprehensive services at a low cost.

Wrap up

As a foreign company in UAE, you will find it a bit challenging to remove a local sponsor, even when you have really good reasons to move in this direction. Depending on your case, you may have to furnish extensive paperwork. 

Prospr understands how complex this process is, thereby we offer our consultant support to make the process as smooth as you want. Whether you need help for setting up a business in Dubai, from a legal group or quick assistance in finding a new sponsor, we are always ready to help. Feel free to contact us.